Apple Royalties to Imagination to be Slashed as Deal Comes to an End

Royalty payments from Apple to Imagination will likely be cut to one third of the current rate as Apple winds down its supply deal with the company, reports UBS via Reuters.

UBS estimates that Imagination will be loss-making by fiscal 2019 without Apple's payments and will have to take cost cutting measures to address this.

Earlier this month, Imagination Technologies announced that Apple had informed the company that in 15 months to 2 years it will no longer use its intellectual property for GPUs. Rather, as previously reported, the company is building its own GPU.

In the announcement, Imagination suggested it would see Apple in court claiming "it would be extremely challenging to design a brand new GPU architecture from basics without infringing its intellectual property rights."

UBS forecasts Apple is likely to ratchet down the royalty rate it currently pays of around $0.30 to closer to $0.10 - the rate Imagination charges customers such as MediaTek.